16 years in global equity markets since the Global Financial Crisis

Key takeaways:

• Global equity markets have risen many folds since the global financial crisis (GFC) in 2008-2009, with the FTSE All World returning 216%, or an annualised return equivalent of 7.7% in US dollars
• Divergences in performance within regions can be observed between 2008-24: The FTSE USA gained an annualised return of 11.1% and the FTSE Developed 8.2% in US dollars, the latter benefiting from its high exposure to US equities. These contrast the lower annualised returns of 3.3% for emerging markets, 3.7% for the UK and 4.9% in Europe ex UK
• The US equity weight has increased from 41% in 2008, to more than three fifths of the market weight in the FTSE All World. The Japanese and UK weights have fallen the most over the last 16 years
• Post GFC was the era of the large caps, notably since about 2018, when their market share in the FTSE Total Cap Index (includes micro and small, mid and large caps) increased by 3% to 89% from 86%
• Since 2002, the correlation of the US with the FTSE All World has stayed unchanged at about 97%. Japan has seen the largest increase in correlation from 59% to 88%, while the UK has been the only market to see a decrease from about 86% to 82%
• Technology’s rapid rise has displaced traditional industries such as Energy, Financials and Basic Materials in the FTSE All World
• The US has contributed around 181% of a total of about 216% return in US dollar terms during the last 16-year due in part to Technology

Points of differentiation: 

• Historical performance analysis: Detailed comparison of regional performance since the GFC
• US Equity dominance: Highlighting the significant rise in US equity weight and its return impact
• Sector shifts: Emphasis on the rise of Technology and the decline of traditional industries
• Correlation trends: Insights into how correlations between different markets have evolved
• Regional divergences: Contrasting returns between developed and emerging markets, and within developed markets

 What does our research mean for investors?  

This research highlights the significant growth in global equity markets since the 2008-2009 Global Financial Crisis, with the FTSE All World index returning 216% in US dollar terms. The US has led this growth, contributing to around 181% of the total return, driven largely by the technology sector. In contrast, emerging, UK, and Europe ex UK equities have seen lower returns. The US equity weight in the FTSE All World index has increased significantly, as large-cap stocks have become more dominant. The correlation between US equities and the global market remains high, and technology has overtaken traditional industries in importance. For investors, focusing on these differences in performance, and understanding regional and industry level performance divergences could be beneficial.